After a strong start in 2010, Materials ETFs lead last week’s market retreat.
The Materials Select Sector SPDR Fund (XLB) fell nearly 8% in last week’s sell-off that saw the broader market decline nearly 5% in three days. XLB got off to a fast start in 2010, gaining 5% before the pull back.
Materials stocks are sensitive to growth in home building and China. Both market segments have seen prospects dim as the US tightened mortgage lending requirements and China’s banks have begun to slow lending activity.
XLB’s top holdings include Monsanto, Freeport-McMoRan, Dow Chemical and DuPont. In addition to the macroeconomic factors, all four companies face their own unique challenges.